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Econ 103 > Change in Supply and Demand (Graphs) - ALL EXAMS - Rustici > Flashcards

Change in Supply and Demand (Graphs) - ALL EXAMS - Rustici Flashcards

1
Q

What is Derived Demand?

A

a demand for a commodity, service, etc. which is a consequence of the demand for something else.

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2
Q

What is Factors of Production?

A

resources, or inputs are what is used in the production process to produce output—that is, goods and services.

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3
Q

What is the Law of Demand?

A

A principle that states that there is an inverse relationship between the price of a good and the quantity consumers will buy

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4
Q

What is the Law of Supply?

A

There is a direct relationship between the price of a good and the quantity producers will produce

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5
Q

What is equilibrium

A

A state in which the conflicting forces of supply and demand are in balance. It is also the center of value

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6
Q

What are the Demand factors?

A

1) Values of BUYERS
2) Number of BUYERS
3) Income of BUYERS
4) Relative Goods

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7
Q

What are the Supply factors?

A

1) Values of PRODUCERS
2) Number of PRODUCERS
3) Technology (production)
4) Inputs
5) Taxes / Subsidies

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8
Q

In a Demand Curve, what is held at Ceteris Paribus? What sets the equilibrium price?

A

Supply. The Supply Curve

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9
Q

In a Supply Curve, what is held at Ceteris Paribus? What sets the equilibrium?

A

Demand. The Demand Curve

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10
Q

On the Demand Curve, what does the Y-Axis show?

A

Change in Quantity demanded

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11
Q

On the Supply Curve, what does the Y-Axis show?

A

Change in Quantity supplied

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12
Q

What sets the equilibrium price?

A

Where the supply curve sits

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13
Q

A shift in supply or demand curves is categorically different than movement ALONG an EXISTING supply and demand curve. A movement along a given curve from A to B is caused..?

A

Only by a change in the Relative Price (Y-Axis) of the good

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14
Q

A change or shift of a supply or demand curve is caused ONLY by anything BUT the relative price. A movement in quantity from A to B can Never be caused..?

A

By a change in price of the good

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15
Q

A non-price of the good factor changes the quantity on what axis?

A

X-axis

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16
Q

A DECREASE is always a shift to the _______. Regardless if it is a Supply or Demand Curve.

A

Left

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17
Q

An INCREASE is always a shift to the _______. Regardless if it is a Supply or Demand Curve.

A

Right

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18
Q

What type of relationship do normal goods have? In relation to what?

A

Direct. Income and Demand

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19
Q

What type of relationship do inferior goods have? In relation to what?

A

Inverse. Income and Demand

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20
Q

The price of SUBSTITUTES always move in what direction?

A

The same direction

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21
Q

COMPLIMENTS move in what direction on the demand curve?

A

Opposite directions

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22
Q

Substitutes, and Compliments are all categorized as what type of good?

A

Relative good

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23
Q

What does a price increase indicate?

A

A shortage

24
Q

What does a price decrease indicate?

A

A surplus

25
Q

Changes in supply measure what?

A

Quantity shifts

26
Q

How are supply curves drawn?

A

With Logic and not my eyes.

27
Q

In a supply curve a decrease a decrease goes _______ the demand curve.

A

Up

28
Q

What happens when you go down the demand curve? Why?

A

An increase in quantity demanded. The Y-Axis is the change in QD

29
Q

What happens when you go down the supply curve? Why?

A

A decrease in quantity supplied. The Y-Axis is the change in QS.

30
Q

How do you solve Change in Supply and Demand Problems?

A

1) Identify if it is a production supply variable or a consumer variable
2) Whether it is an increase or decrease / right or left shift

31
Q

Taxes are a punishment. what do they do to prices?

A

They increase price of relative goods

32
Q

Subsidies are a reward. What do they do to prices?

A

They decrease price of relative goods

33
Q

In a demand curve, a shift to the left is a..?

A

Surplus

34
Q

In a supply curve, a shift to the left is a..?

A

Shortage

35
Q

In a demand curve, a shift to the right is a..?

A

Shortage

36
Q

In a supply curve, a shift to the right is a..?

A

Surplus

37
Q

NEWS! Wieners cure cancer. How does this affect the sale of wieners?

a) Increase. Shortage
b) Decrease. Shortage
c) Increase. Surplus
d) Decrease. Surplus
e) No increase or decrease (equilibrium)

Why? What happens next?

A

a) Increase. Sudden Shortage

Buyers value for wieners increases, causing a right shift and shortage of wieners on a demand curve.

Next, the shortage will be alleviated by an increase in price and supply, setting a new equilibrium price.

38
Q

NEWS! Wieners cause a slow and painful death. How does this affect the sale of wieners?

a) Increase. Shortage
b) Decrease. Shortage
c) Increase. Surplus
d) Decrease. Surplus
e) No increase or decrease (equilibrium)

Why? What happens next?

A

d) Decrease. Sudden Surplus

Buyers value for wieners decreases, causing a left shift and surplus of wieners on a demand curve.

Next, the surplus will be alleviated by an decrease in price and supply, setting a new equilibrium price.

39
Q

NEWS! More people move into Schnitzel. They crave wieners. What happens to the sale of wieners?

a) Increase. Surplus
b) Decrease. Surplus
c) Decrease. Shortage
d) No increase or decrease (equilibrium)
e) Increase. Shortage

Why? What happens next?

A

e) Increase. Shortage

More buyers who crave wieners increases the sale of wieners. This causes a right shift and shortage for wieners.

Overtime, the price will increase along with supply to compensate for this new demand for wieners, setting a new equilibrium price.

40
Q

NEWS! More people moving out of Schnitzel. They say f#%@ wieners. What happens to the sale of wieners?

a) Increase. Surplus
b) Decrease. Surplus
c) Decrease. Shortage
d) No increase or decrease (equilibrium)
e) Increase. Shortage

Why? What happens next?

A

b) Decrease. Surplus

Less buyers who crave wieners decreases the sale of wieners. This causes a left shift and surplus for wieners.

Overtime, the price will decrease along with supply to compensate for this new demand for wieners, setting a new equilibrium price.

41
Q

NEWS! Minimum wage was raised from $1 to $1.15 in Schnitzel! What happens to the sale of wieners, keeping in mind that wieners are a normal good?

a) Increase. Surplus
b) Decrease. Surplus
c) Increase. Shortage
d) Decrease. Shortage
e) No increase or decrease (equilibrium)

Why? What happens next?

A

c) Increase. Shortage

An increase in income, keeping in mind wieners are a normal good, causes an increase in demand. This causes a right shift and a shortage of wieners.

Overtime, the price will increase along with supply to compensate for this new demand for wieners, setting a new equilibrium price.

42
Q

NEWS! Minimum wage was lowered from $1 to $0.15 in Schnitzel! What happens to the sale of wieners, keeping in mind that wieners are an inferior good?

a) Increase. Surplus
b) Decrease. Surplus
c) Increase. Shortage
d) Decrease. Shortage
e) No increase or decrease (equilibrium)

Why? What happens next?

A

c) Increase. Shortage

An decrease in income, keeping in mind wieners are an inferior good, causes an increase in demand. This causes a right shift and a shortage of wieners.

Overtime, the price will increase along with supply to compensate for this new demand for wieners, setting a new equilibrium price.

43
Q

Grr! Wiener’s rival is the Wurst! They just competitively undercut the wiener business! What happens to the sale of wieners?

a) Decrease. Surplus
b) Increase. Shortage
c) Decrease. Shortage
d) No increase or decrease (equilibrium)
e) Increase. Surplus

Why? What happens next?

A

a) Decrease. Surplus

A decrease in price of a substitute will cause a decrease in demand in it’s relative good. This causes a left shift and a surplus of wieners.

Overtime, the price of wieners will decrease to compensate for this new demand in wieners.

44
Q

Haha! Wiener’s rival is the Wurst! Wieners just undercut Wurst! What happens to the sale of wieners?

a) Decrease. Surplus
b) Increase. Shortage
c) Decrease. Shortage
d) No increase or decrease (equilibrium)
e) Increase. Surplus

Why? What happens next?

A

b) Increase. Shortage

A decrease in price of a substitute will cause a decrease in demand in it’s relative good. This causes a right shift and a shortage of wieners.

Overtime, the price of wieners will decrease to compensate for this new demand in wieners.

45
Q

NEWS! Wiener just partnered with Buns. wieners and buns are complementary goods. The price of buns were marked up. How does this effect sales of wieners?

a) Decrease. Surplus
b) Increase. Shortage
c) Decrease. Shortage
d) No increase or decrease (equilibrium)
e) Increase. Surplus

Why? What happens next?

A

a) Decrease. Surplus

A Decrease in price of a complementary good will cause a decrease in demand in it’s relative good. This causes a left shift and a surplus of wieners.

Overtime, the price of wieners will decrease to compensate for this new demand in wieners.

46
Q

NEWS! Wieners cure cancer. How does this affect the production of wieners?

a) Increase. Shortage
b) Decrease. Shortage
c) Increase. Surplus
d) Decrease. Surplus
e) No increase or decrease (equilibrium)

Why? What happens next?

A

b) Decrease. Shortage

Buyers value for wieners increases, causing a decrease in supply, which causes a left shift and shortage of wieners on a supply curve.

Next, the supply will be alleviated by a increase in price and demand, setting a new equilibrium price.

47
Q

NEWS! Wieners cause a slow and painful death. How does this affect the production of wieners?

a) Increase. Shortage
b) Decrease. Shortage
c) Increase. Surplus
d) Decrease. Surplus
e) No increase or decrease (equilibrium)

Why? What happens next?

A

c) Increase. Surplus

Buyers value for wieners decreases, causing a increase in supply, which causes a right shift and surplus of wieners on a supply curve.

Next, the supply will be alleviated by a decrease in price and demand, setting a new equilibrium price.

48
Q

NEWS! More people move into Schnitzel. They crave wieners. What happens to the production of wieners?

a) Increase. Surplus
b) Decrease. Surplus
c) Decrease. Shortage
d) No increase or decrease (equilibrium)
e) Increase. Shortage

Why? What happens next?

A

c) Decrease. Shortage

More buyers value wieners, which decreases supply, causing a left shift and shortage of wieners on a supply curve.

Next, the supply will be alleviated by a increase in price and demand, setting a new equilibrium price.

49
Q

NEWS! More people moving out of Schnitzel. They say f#%@ wieners. What happens to the production of wieners?

a) Increase. Surplus
b) Decrease. Surplus
c) Decrease. Shortage
d) No increase or decrease (equilibrium)
e) Increase. Shortage

Why? What happens next?

A

c) Increase. Surplus

Less buyers value wieners, which increases supply, causing a right shift and surplus of wieners on a supply curve.

Next, the supply will be alleviated by a decrease in price and demand, setting a new equilibrium price.

50
Q

NEWS! A new machine pumps out more wieners per hour! There are so many wieners! How did this effect the production of wieners?

a) Increase. Surplus
b) Decrease. Surplus
c) Increase. Shortage
d) Decrease. Shortage
e) No increase or decrease (equilibrium)

Why? What happens next?

A

a) Increase. Surplus

Better technology increases causing a right shift the production wieners, thus causing a surplus of wieners.

Next, the supply will be alleviated by a decrease in price and demand, setting a new equilibrium price.

51
Q

NEWS! Wiener production method is out of date! How does this effect the production of Wieners?

a) Increase. Surplus
b) Decrease. Surplus
c) Increase. Shortage
d) Decrease. Shortage
e) No increase or decrease (equilibrium)

Why? What happens next?

A

d) Decrease. Shortage

Outdated technology related to production decreases causing a left shift the production wieners, thus causing a shortage of wieners.

Next, the supply will be alleviated by an increase in price and demand, setting a new equilibrium price.

52
Q

NEWS! The cost of raising pigs has increased tremendously. How does this impact the production of wieners?

a) Decrease. Surplus
b) Increase. Shortage
c) Decrease. Shortage
d) No increase or decrease (equilibrium)
e) Increase. Surplus

Why? What happens next?

A

c) Decrease. Shortage

The input price has increased, making production more expensive, decreasing supply. This causes a left shift and a shortage of wieners.

Next, the supply will be alleviated by an increase in price and demand, setting a new equilibrium price.

53
Q

NEWS! The cost of pig feed has decreased tremendously. How does this impact the production of wieners?

a) Decrease. Surplus
b) Increase. Shortage
c) Decrease. Shortage
d) No increase or decrease (equilibrium)
e) Increase. Surplus

Why? What happens next?

A

e) Increase. Surplus

The input price has decreased, making production less expensive, increasing supply. This causes a right shift and a surplus of wieners.

Next, the supply will be alleviated by a decrease in price and demand, setting a new equilibrium price.

54
Q

NEWS! The town of Schnitzel is placing a 500% tax on the production of wieners. How does this effect the production of wieners?

a) No increase or decrease (equilibrium)
b) Decrease. Surplus
c) Decrease. Shortage
d) Increase. Shortage
e) Increase. Surplus

Why? What happens next?

A

c) Decrease. Shortage

The tax on production makes producing wieners more expensive, decreasing supply. This decrease in supply creates a shortage, or a shift to the left.

Next, the supply will be alleviated by an increase in price and demand, setting a new equilibrium price.

55
Q

NEWS! The town of Schnitzel is placing a 2% subsidy on the production of wieners. How does this effect the production of wieners?

a) No increase or decrease (equilibrium)
b) Decrease. Surplus
c) Decrease. Shortage
d) Increase. Shortage
e) Increase. Surplus

Why? What happens next?

A

e) Increase. Surplus

The subsidy on production makes producing wieners cheaper, increasing supply. This increase in supply creates a surplus, or a shift to the right.

Next, the supply will be alleviated by a decrease in price and demand, setting a new equilibrium price.

Econ 103 (2 decks)

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